Why Klout Had to Change — and Why You Shouldn't Count It Out

When was the last time you checked your Klout score? And more importantly, did you really care about it?

The answer to that question could help explain why, late last week, Klout gave itself a whole new business model. Now it won't just measure your score and offer dubious perks, it will also provide you with a stream of content you'll most likely to want to share, actively boosting your score. It went from playing the referee to playing the coach.

During a conversation with Mashable, Klout founder and CEO Joe Fernandez insisted that the new service change is "not a pivot" — rather, it is a response to the most common question he had been asked by users for five years: How can I boost my Klout score? "We always knew the Klout score was the foundation," Fernandez says. "We think of this as extending our value proposition."

There has long been a kind of hazy malaise surrounding Klout. The company isn't doing badly per se, it's just that it would make a great case study of a mid-level startup stuck in neutral, with 65 employees, an Alexa ranking in the low 800s, and a model that relied on segregating its users into winners and losers. Providing perks for the most influential brings in reasonable revenue, as do Klout's less sexy enterprise tools (Klout for Business has 200,000 customers). It's still working through a $30 million round of investment led by Kleiner Perkins and a $5 million note from an Asian investor, among others.

So Klout isn't going away. But it isn't really going anywhere, either. You don't hear any clamoring for a Klout IPO — or at least there hasn't been an article hinting at one since 2012. By late 2013, Klout's COO left the company for Uber, the epitome of a startup that most definitely is going somewhere.

The Birth

Back in 2009, Klout was the subject of intense buzz. It wasn't quite an Internet darling, but it was certainly an Internet attention-grabber. Fernandez came up with the idea while his mouth was wired shut and he was forced to turn to Twitter and Facebook for his human interaction. (Check out the video below, where Fernandez tells Mashable the full story.)

Fernandez's isolation led him quickly to an understanding at which we've all since arrived. Social media is insanely addictive, and one of the things that keeps pulling us back — if we're honest with ourselves — is watching the upward swing of our Twitter followers, Facebook friends and similar metrics on whatever network matters to us. But what if there were one score to rule them all?

For a few years, Klout — measured on a 1-100 scale — threatened to become that score. Fernandez had perfectly timed the launch of his service to coincide with the Facebook and Twitter boom. By 2010, I found, people were boasting about their Klout scores in bars — and these were folks not in the tech industry. But then the novelty evaporated, the inevitable backlash arrived, and a year later Fernandez told us he was wavering back and forth from "feeling like the smartest dude in the world to feeling like you’re so screwed."

The Backlash

Oddly enough, the Klout backlash was led by a couple of science fiction writers, Charles Stross and John Scalzi — perhaps because they're accustomed to analyzing things that sound like good ideas and thinking them through to their logical conclusion. Stross accused Klout of "flat-out illegal practices," with a privacy policy "riddled with loopholes that permit them to resell personal data." Scalzi called the company "a little bit socially evil," and pointed out how arbitrary the score seemed:

Who made Klout the arbiter of online influence, aside from Klout itself? I could rank your influence online. If you like: I'll add your number of Twitter followers to your number of Facebook friends, subtract the number of MySpace friends, laugh and point if you're still on Friendster, take the square root, round up to the nearest integer and add six. That's your Scalzi Number (mine is 172). You're welcome.

Klout made the score seem even more arbitrary by repeatedly tweaking its algorithm — even though it was endeavoring to make things better. Fernandez had been stung by criticism over the fact that, for example, Justin Bieber had more Klout than Barack Obama, and wanted to make the score more of a reflection of real-world influence. But for many who had bought into the Klout concept and found their scores reset, this just made it clear the game was rigged; the score had no stability to it.

The way Klout calculates its score is freely available via its API; it's also far beyond the average user. "It’s not a black box so much as it's too complex to explain," says Fernandez. "We’re processing 50 billion pieces of information every day to crunch it."

While Klout stumbled gamely onward in its search for the perfect algorithm, Twitter followers and Facebook Likes were becoming ever more worthwhile and granular metrics in their own right. Brands started to realize that they measured subtly different things, just as engagement on the two major networks happens in subtly different ways. Klout wasn't just comparing apples and oranges; it was throwing apples and oranges into the same barrel, squeezing them together, and claiming the result was the only juice you really needed.

Even from a gamification perspective, Klout was hobbled by the fact that its number only extends to 100. In practice, that means your score isn't likely to change by any impressive amount over an extended period of time; rather, your Klout score tends to go up and down like the bathroom scales of a yo-yo dieter. On Twitter, by contrast, it feels like you're building an army of followers, and the trend is generally upwards and optimistic. Every new follow is a cause for celebration.

The Bonanza

Klout did have, and continues to have, a nice little thing going with Klout Perks. This is the meat of its business model, which allows companies to pay for access to influencers, even if the model that measures their influence is somewhat flawed. Occasionally you'll get an interesting promotion — last year American Airlines offered free access to its Admirals Club lounges for anyone with a Klout score over 55, for example. But for the most part, Perks have an underwhelming feel to them. A recent example was the Klout Perk that gave users 20 Chicken McNuggets for free, a promotion that was met with some hilarity on Twitter: Is this what Klout influencers aspire to eat? (The Perk was worth a whopping $5.)

Perks put Klout in a damned-if-you-do, damned-if-you-don't situation. Either Klout scores don't really mean anything, in which case it's a fun novelty with minor discounts — kind of like what you'd get if you combined Coupons.com with one of those apps that tells you how much time you've wasted on Facebook. Or the score is a signifier of a new inequality in society, in which case Klout gets slammed for promoting elitism — which is not what every potential Klout customer wants to be identified with. I've heard of several tech world events where Klout wanted to offer a special VIP entry line and gift bags for attendees with Klout scores over a certain number; the organizers, fearing the backlash from attendees on the other side of the divide, politely refused.

Still, enough corporations want to offer deals to the right kind of people that Klout saw a 2.5x increase in its Perks revenue in 2013. "Our vision over time is that Perks become a core part of a new product," Fernandez says.

Bouncing Back

About that new product. I came to it with skepticism, ready to witness the last desperate gasp of a social media startup trying to stave off irrelevance. But the thing is, it's actually quite a neat setup. Klout's long-running deal with Microsoft is bearing fruit; it gets data from Bing's Internet crawlers before they get added to the search engine, and it presents you with a list of just-published stories and suddenly hot sites in topics of your choice. (The default topics are the ones you've been "given Klout in" by other users. yet another novelty feature the company is de-emphasizing in its new incarnation.)

You can share items to one or all of your social networks with ease from the Content page, or schedule them for later. Sure, services like HootSuite already offer this sort of social media dashboard, but they don't prime the pump with stories — and they're not this easy to use. Fernandez suggests the use case: "I get up in the morning and realize I haven't shared anything for three or four days."

I found myself sharing from the Klout stream more frequently than I would have if I were just testing it for this story, and I wasn't alone. Klout ran the new content stream as an alpha test for 10% of users, starting four months ago, and they were the more engaged users with higher scores. So when it was opened up to the entire user base, the company expected the content tool would see a 10x or less increase in the number of social shares. In fact, the numbers have been consistently 20 times higher than their alpha levels — and they've stayed consistently high every day since the content tool was introduced last week.

That's a lot of tweets and Facebook posts suddenly popping up with a Klout URL, which is some nice free advertising. It isn't bringing in any extra dollars right now, but it is giving long-dormant Klout users a good reason to give the service another chance. In the long run, Fernandez says, the company may bring out a "premium version" of the content dashboard, aimed at marketers.

In short, don't count Klout out just yet. It has found a way to command your engagement, and may yet become the little social media service that could.

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